Kuehne + Nagel has increased its penetration of the contract logistics sector by buying ACR Logistics (formerly Hays Logistics), one of Europe’s largest providers. The company is being sold by US-based Platinum Equity Group which bought the company last year from Hays PLC.
ACR Logistics operates at 140 locations in 11 countries, where it manages 2.2 million sqm of warehouse space. It is particularly strong in the retail and consumer sectors, areas in which K+N has traditionally been weakest. ACR Logistics has a strong presence in the UK, France, Italy and the Benelux which will complement K+N’s existing capabilities. Other benefits include considerable growth from increased cross-selling activities, particularly in Eastern Europe and Asia. The purchase price was put at e440 million with net debt of e50 million being assumed.
A bigger deal
Although of major significance, an even larger acquisition has just been announced, as Logistics Europe goes to press. Deutsche Bahn – owners of Schenker – signed and agreement to pay e1bn for global forwarding company Bax Global. Back in June 2005 it was reported that parent company Brinks had put Bax up for sale to concentrate on other, more lucrative, parts of its business. The move followed the sale of other rivals such as GeoLogistics and Menlo which were disposed of by their owners to take advantage of the buoyant market, especially in the US.
The acquisition of Bax Global, which had revenues of e2077m and operating profits of e48m in 2004, will particularly strengthen Schenker’s forwarding operations in the Americas where Bax generates 48 per cent of its sales. Schenker’s Air and Sea forwarding revenues in 2004 were e3,760m and the combination of the two operations would create the world’s second largest air freight forwarder, the largest being the DHL Danzas/Exel combination. There had been a growing belief that increasing mergers and acquisition activity in the market was leaving Schenker behind and this may have prompted management to make the approach.
Whilst Kuehne + Nagel and Schenker have been busy increasing their European and global presence, TNT announced that it was to sell a major part of its French logistics business and so doing became the latest foreign company to become a victim of the harsh market environment in France.
TNT had built its logistics operation in France largely through acquisitions. In 2000 it acquired a controlling stake of 51 per cent in Marseille based Barlatier which at the time had a turnover of e46m. This provided it with a base in the industrial, pharmaceutical and electronics sectors. It followed this up in 2002 with the larger acquisition of Transports Nicolas (turnover e115m), one of the leading logistics providers of temperature-controlled activities for the retail and fast moving consumer goods (FMCG) sector.
However the combined operations in France were never able to meet TNT’s performance expectations despite a considerable senior management focus on the country. Whereas much of TNT Logistics operations throughout the rest of the world are based on higher value supply chain management, France’s operations were largely oriented around commoditised transport provision, and therefore have been particularly vulnerable to the weak economy and falling volumes.
TNT Logistics is not the only company to find France hard going. UK based TDG withdrew from the market in 2003 selling its subsidiary to a local company, MGF Logistique. Belgian ABX Logistics sold its struggling French logistics activities to the same company in 2004. Even market leaders such as Exel, whose consumer logistics operations are loss making, and DPWN, which recently highlighted integration problems in the market, have not been immune.
TNT, so long a driving force behind consolidation in the global logistics industry, has itself received an approach from a potential buyer. The move has come from a German investor, Cornelius Geber, a former Kuehne + Nagel executive, who gave an interview in which he confirmed that he had already contacted the company about a takeover. He is apparently in talks with partners about putting together a bid for TNT although it is still unclear who these partners could be. TNT has made no comment about the approach.
Any bid for the company is likely to prompt a major political discussion in the Netherlands, which could hinder a successful takeover. Earlier in the year the Dutch finance ministry sold 43.4 million TNT shares reducing the state holding in the group from 19 to 10 per cent. However, the Netherlands also owns a so-called ‘golden share’ designed to block any fundamental changes to the company structure. The legality of this right is presently being challenged by the European Commission in the European Court of Justice.